What Defines a Value Stock?
A value stock traditionally has a lower price when compared to stock prices of companies in the same industry. This indicates that the company may be undervalued, as investors are not expressing as much interest in such companies. The most commonly used way to check for value is with the price-to-earnings multiple, or P/E. A low P/E multiple is a good indication that the stock is undervalued.
Below is a list of notable value stocks in the technology sector:
- Avnet (NASDAQ:AVT) – P/E: 8.86
- Arrow Electronics (NYSE:ARW) – P/E: 5.67
- Remark Hldgs (NASDAQ:MARK) – P/E: 5.87
- Nortech Systems (NASDAQ:NSYS) – P/E: 3.43
- Optical Cable (NASDAQ:OCC) – P/E: 7.09
Most recently, Avnet reported earnings per share at $2.15, whereas in Q2 earnings per share sat at $1.51. Its most recent dividend yield is at 2.25%, which has decreased by 0.23% from 2.48% in the previous quarter.
Arrow Electronics’s earnings per share for Q2 sits at $5.78, whereas in Q1, they were at 5.43. Remark Hldgs has reported Q1 earnings per share at $-0.24, which has increased by 36.84% compared to Q4, which was -0.38. This quarter, Nortech Systems experienced an increase in earnings per share, which was $-0.34 in Q4 and is now $0.04. Optical Cable saw an increase in earnings per share from -0.12 in Q1 to $-0.03 now. Most recently, the company reported a dividend yield of 2.45%, which has (”, ‘not changed’) by 0.0% from last quarter’s yield of 2.45%.
The Significance: A value stock may need some time to rebound from its undervalued position. The risk of investing in a value stock is that this emergence may never materialize.
